This past Friday, Congress missed a deadline and may have plunged us all back into recession. If that sentence sounds familiar, that may be because something very similar happened back in January. So, as we did only two months ago, it’s time to figure how we got here and what went wrong.
What went wrong?
Congress allowed the sequester to happen. In short, the sequester is a set of across-the-board cuts to discretionary spending programs. It was initially set up to force a budget deal, but apparently that didn’t work out. The cuts will total about $85.3 billion in the rest of 2013, which is about 6.5 percent of all discretionary spending.
How did we get here?
As with many things in Washington, the decision to let the sequester happen was a political calculation. Make no mistake: Though Democrats and Republicans both advanced alternatives to the sequester, and Obama called meetings to try to avert it, your elected officials allowed the sequester to happen.
Why would Congress want this to happen?
More Americans believe that congressional Republicans are to blame, so Obama and the rest of the Democrats are gambling that cuts will be moderately painful and noticeable to most Americans. That would help Democrats win the resulting PR battle, helping in their attempt to reclaim the House in 2014.
Meanwhile, Republicans face a difficult choice. About half of their base favors letting the sequester happen, while about half want to avert it. If they had taken pains to avert the sequester, they risked angering their base by compromising. The optimal scenario for Republicans was for the sequester to occur, but for the negative effects to be negligible at best. So both sides, concerned more with their political futures than with the economy, put on a show of compromise without any real effort.
Everyone in Washington saw this coming weeks ago, but the intensifying media coverage only made Democrats and independents more likely to blame the GOP, and it only made Republicans more divided on the issue. In short, by accurately predicting the future, the media brought it about. It was so Raven.
What immediate impacts will this have?
The sequester cuts will have the greatest effect on federal employees. The Washington Post does a pretty good job breaking it down by department here, but the short version is that many employees will have to go on unpaid furlough for an indefinite period. Temporary employees will get laid off across the board, hiring freezes will go into effect and government departments will generally suffer.
The sequester could also have some major macroeconomic effects. Back before the fiscal cliff, the sequester was projected to cause a decline of roughly 0.5 percent in GDP, and anywhere from about 700,000 to 2 million lost jobs. Some of those are federal workers or contractors, but many would come from indirect losses.
Let me rephrase: What impact will this have on Northwestern?
Well, for anyone pursuing a research grant, I’ve got some bad news. Morty already laid it out pretty well, but grants are getting cut nationwide. Northwestern specifically is set to lose 5.1 percent of its federal funding for fiscal year 2013. That won’t cut into Pell grants, thankfully, but it will affect how the university funds research for the next year or so.
Off campus, the effects of the sequester will be apparent wherever the federal bureaucracy works. For example, it could be a good idea to start getting to O'Hare significantly earlier. Transportation Secretary Ray LaHood predicts that airports could see up to 90-minute delays. Given that O’Hare is already the airport most likely to face delays nationwide, this will no doubt make travel experiences this year very memorable.
What’s going to be the political impact of the sequester?
Again, this pretty much entirely relies what the economic impact of the sequester is. If the sequester really is so bad that the average American starts to notice it, Democrats should come out ahead. In that scenario, independent voters get frustrated enough with Republican opposition for it to matter at the ballot box. Democrats run a good ground game, exploit frustrations about government gridlock and persuade voters that things would be better with a Capitol and White House working together.
Republicans, on the other hand, aren’t trying to win so much as they are trying not to lose. Even in a best-case scenario, where the sequester somehow has no impact on the economy, Republicans don’t gain a significant amount of voters. They avoid compromising or raising taxes, which plays well to the base, but doesn’t necessarily appeal to independents. What Republicans will win is unclear, but they certainly have a lot to lose.
So what happens next?
The same thing that always happens next in Washington. First, the rounds of recrimination. In fact, if you’d tuned into any of the Sunday morning talk shows, you probably would have seen the opening salvos. Then, the media continually runs over who won or who lost, until something new comes up.
After that, Congress would need to pass a continuing resolution by March 27. Without it, the government will shut down. And then in May, the government has to reach a deal over the debt ceiling, or face another shutdown. And yes, those will inevitably lead to their own protracted battles. And even though everyone in Washington knows that, being able to predict the upcoming fight won’t keep it from happening.